Buying a home – more doable than you think?

Many who dream of owning their own home someday may actually be able to buy one today, according to Roland Shar from Primary Residential Mortgage Group.

It’s true. The financial obstacles keeping you from buying your first home may seem insurmountable, but as Shar suggests, “the biggest obstacle is people thinking they can’t do it, before they’ve really tried.”

For many, the first stumbling block is coming up with a 20-percent down payment.

“The down payment is traditionally a barrier for those buying their first home, but it doesn’t have to be,” said Shar, who estimates roughly 30 percent of buyers in Hawaii who financed their home, did so with less than 10 percent down.

First-time homebuyer programs offering 3 percent down payments are available through Fannie Mae and Freddie Mac. Military veterans can qualify for 100 percent financing through the Veterans Administration. Additionally, for certain areas the U.S. Department of Agriculture has designated as “rural,” 100 percent financing is available through USDA loans.

By qualifying for any of these programs, the required cash up front is significantly reduced. For example, 20 percent down on a $600,000 home would mean a down payment of $120,000 — but, at 3 percent down, the down payment is only $18,000. That’s a sizable discount.

“You don’t have to wait until you have 20 percent down to buy a home,” Shar said. “That’s pretty substantial. If people knew they could buy with less than 20 percent, there might be more people successfully buying.”

According to the National Association of Realtors, 81 percent of Americans purchase their first home with less than 20 percent down. Shar cites two main reasons why the percentage is less in Hawaii than on the mainland.

“One, we have a culture here where it’s common for mom and dad to help out, and two, we have the move-up buyer who has achieved enough equity growth to come up with a larger down payment,” said Shar.

The Honolulu Board of Realtors reported in March the median sales price of a single-family home was $782,500 and condo $429,000. If you’d purchased ten years ago, in 2009, the median sales price of a single-family home on Oahu was $575,000, and for a condo was $302,000. In 1999, the median price of a home was $290,000, and a condo $125,000. As real estate historically appreciates, even a modest starter home will likely gain equity over time and can be the source of a sizeable down payment down the road.

The lesson here is to not give up before you try — many first timers are selling themselves short when it comes to financing options. Find out what reduced down payment options you might have. Contact a loan officer. The answer may surprise you.

“It’s about knowing how to participate in the real estate market. It’s about getting educated and sitting down with someone who can help you put together a plan,” said Shar. “We’re here. You can sit down with any loan officer, it’s free, no obligation. It’s an education. We are here to help people get into homes. That’s what we do.”